YOUR MONEY | Money Talk / Liz Pulliam

IRS Dispute? You Probably Can't Afford to Forgo Professional Help

Q: You continually write about the need to have good professional advice in financial matters, but some of us can't afford professionals. We're barely getting by, and then when we have a problem, we're stuck. I'm currently fighting with the IRS and can't afford an accountant or an attorney. What can we non-rich folks do?

A: Of course it's tough to hire good help when you're on a limited income. But the ability to "afford" help is a subjective call.

Regardless of how much money you make, odds are that if you have an IRS dispute worth fighting about, then it's worth getting a professional to help you fight.

You usually can't afford not to get help. Many more taxpayers have gone broke trying to fight the IRS on their own than ever went bust paying attorneys' and accountants' fees.

It's like trying to represent yourself in a courtroom. You don't know the players or the rules of the game. You sail in, sure of the rightness of your cause (or your ability to brazen it out), and wind up saying or doing something that gets you in even more trouble.

What starts out as an easily resolved dispute turns instead into liens on your home, garnishment of your wages and your credit report in tatters. Is it fair? Maybe not. But it's reality.

In fact, most tax preparers would advise you to stay out of the process completely. Send your accountant or enrolled agent to deal with the audit; if you must be present, keep your darned mouth shut.

Every preparer has a horror story of being on the verge of successfully wrapping up an audit only to have the nervous taxpayer start babbling excuses about a deduction the auditor hadn't even noticed.

How do you find good tax help? Start with people you know who have survived an IRS audit and ask them for references (or warnings about whom not to use). If that doesn't turn up enough leads, chat with friends and co-workers to see whom they use to prepare their taxes, but make sure the preparer is qualified to represent clients in front of the IRS (not all preparers are) and that he or she has experience in doing so.

If you're unfortunate enough to already be in Tax Court, where the worst IRS dogfights wind up, and you're really broke, check with local law schools to see if they have clinics that can help.

. . . Make Do or Do Without

Q: I'm desperately trying not to live paycheck to paycheck, but I'm having trouble finding places to cut back. Any suggestions?

A: Boy, did you come to the right place.

Just as people sometimes launch a diet with a little water-only fast to speed up results, you might try a crash course in saving using techniques that you would never want (or be able) to sustain in the long haul.

After your budget is in better shape, you'll feel more comfortable about controlling your spending without Draconian measures. Or you might decide to continue doing without some of the spending you once thought was essential.

Ready for your boot camp? Try some or all of the following:

* Disconnect your cable, or cut back to basic service.

* Stop eating out--completely.

* Prepare meals out of your pantry instead of grocery shopping; you'll be amazed at what's hiding in your cabinets.

* Use your local library for books and videos.

* Cancel those add-on phone features like call waiting that just irritate everyone anyway.

* Stay out of malls, and throw out catalogs as soon as they arrive.

* Don't use an ATM that charges fees.

* If you belong to a health club, see if you can take a hiatus without having to pay another initiation fee; take long brisk walks instead.

* Write letters or use e-mail instead of making long-distance calls.

* Turn down the heater in cold weather and pile on sweaters; in hot weather, shut off the air conditioner and hang out in your underwear.

* Invite your friends over for potluck and Scrabble instead of going out for dinner and movies.

* If you smoke, drink or have other expensive hobbies, like poker or gardening, take a temporary respite.

* Instead of seeing what you're doing as a sacrifice, view saving money as a game--one that's getting you closer to your goal of financial independence.

How about it, readers? Any more suggestions?

Timely Tip

Having your paycheck deposited directly into your checking account is safer and faster than processing the transaction by hand. Yet only 32% of U.S. companies offer direct deposit. If you want your employer to be one of them, send a request for more information to Direct Deposit Coalition, P.O. Box 8857, St. Louis, MO 63101, or visit http://www.directdeposit.org on the World Wide Web.

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Liz Pulliam is a personal finance writer for The Times and a graduate of the certified financial planner training program at UC Irvine. She will answer questions submitted--or inspired--by readers on a variety of financial issues in this column. She regrets that she cannot respond personally to queries. Questions can be sent to her at liz.pulliam@latimes.com or mailed to her in care of Money Talk, Business Section, Los Angeles Times, Times Mirror Square, Los Angeles, CA 90053.